Cellini gives up legal battle over costly Springfield hotel

January 17, 2008|By Jeffrey Meitrodt, TRIBUNE REPORTER

SPRINGFIELD — After two decades of wrangling with the state over an ill-fated decision to build an upscale hotel with taxpayer money in downtown Springfield, Republican power broker William Cellini and his partners are ending their legal battle.

The decision comes after the state secured a foreclosure order earlier this week against the primary owners of the President Abraham Lincoln Hotel and Conference Center.

"The client decided it was time to get it behind him," said attorney Stephen Tagge, who represents Cellini and his 80 or so partners. "There was no sense in litigating it for the next two or three years."

Illinois Treasurer Alexi Giannoulias said the move paves the way for the state to put the hotel on the auction block, a process that could last as long as a year. Giannoulias said he doesn't know what the hotel is worth, but doesn't think taxpayers will recover all of the $29.5 million in unpaid principal, interest and legal fees.

In attacking the "sweetheart deal" that led to the construction of the 316-room hotel, Giannoulias joins a long line of state officials who have denounced various attempts to keep the politically-connected venture afloat.

The property, which opened in 1985 as the Ramada Renaissance, obtained a $15.5 million state loan with the help of then Gov. James Thompson, a Republican, who was criticized for using his position to help out one of the most influential Republican fundraisers and operatives in the state. Cellini was state transportation secretary in the 1960s under Republican Gov. Richard Ogilvie.

Cellini and his partners quickly stopped making payments on the loan, and the legal battle soon erupted.

Thompson and then-Treasurer Jerome Cosentino, a Democrat, revised the terms in 1990 just before they left office, requiring mortgage payments only when the hotel became profitable.

Since then, the state has recovered almost nothing. The owners have made only two payments in the last 10 years, according to Giannoulias.

Another controversy erupted in 1995 when Treasurer Judy Baar Topinka, another Republican, agreed to reduce the owners' total debts from $19.8 million to $3.75 million. Republican Atty. Gen. Jim Ryan blocked it, saying Topinka signed off on a "bad deal" that would cheat taxpayers.

Cellini and his partners sued to enforce the agreement, but the Illinois Supreme Court ruled in 2005 that the state is immune from such lawsuits.